Secretary of State Mike Pompeo, appearing alongside Haley at the State Department, said there was no doubt that the council once had a "noble vision.
"But today we need to be honest," Pompeo said. "The Human Rights Council is a poor defender of human rights."
The announcement came just a day after the UN human rights chief, Zeid Ra'ad al-Hussein, denounced the Trump Administration for separating migrant children from their parents.
But Haley cited longstanding US complaints that the 47-member council is biased against Israel.
She had been threatening the pull-out since last year unless the council made changes advocated by the US.
"Regrettably, it is now clear that our call for reform was not heeded," Haley said.
Still, she suggested the decision need not be permanent, adding that if the council did adopt reforms, "we would be happy to rejoin it."
She said the withdrawal notwithstanding, the US would continue to defend human rights at the United Nations.
Israeli Prime Minister Benjamin Netanyahu's office called the US decision "courageous," calling it "an unequivocal statement that enough is enough."
The move extends a broader Trump Administration pattern of stepping back from international agreements and forums under the President's "America First" policy.
Although numerous officials have said repeatedly that "America First does not mean America Alone," the Administration has retreated from multiple multilateral accords and consensuses since it took office.
Since January 2017, it has announced its withdrawal from the Paris climate accord, left the UN educational and cultural organisation and pulled out of the Iran nuclear deal.
Other contentious moves have included slapping tariffs on steel and aluminum against key trading partners, recognising Jerusalem as Israel's capital and moving the US Embassy there from Tel Aviv.
Opposition to the decision from human rights advocates was swift. A group of 12 organisations including Save the Children, Freedom House and the United Nations Association-USA said there were "legitimate concerns" about the council's shortcomings but that none of them warranted a US exit.
"This decision is counterproductive to American national security and foreign policy interests and will make it more difficult to advance human rights priorities and aid victims of abuse around the world," the organisations said.
Added Kenneth Roth, the executive director of Human Rights Watch: "All Trump seems to care about is defending Israel."
On Twitter, al-Hussein, the UN human rights chief, said it was "Disappointing, if not really surprising, news. Given the state of #HumanRights in today's world, the US should be stepping up, not stepping back."
And the Heritage Foundation, a conservative think-tank close to the Trump Administration, defended the move, calling the council "notably incurious about the human rights situations in some of the world's most oppressive countries."
- AP
